MNI BRIEF: BNM Leaves Rates On Hold, Inflation Seen Transitory

Bank Negara Malaysia left its key interest rate unchanged Thursday, seeing current policy settings as "appropriate and accommodative". BNM saw a continuing recovery in the economy, although downside risks remain.

Overnight policy rates were held at 1.75%, as expected, but the Monetary Policy Committee said it remained committed "to utilise its policy levers as appropriate to foster enabling conditions for a sustainable economic recovery". The central bank noted inflation was higher, but said it saw increased price pressure as "transitory" and forecast average for 2021 to be closer to the lower target bound.

The outlook, however, is subject to global commodity price developments, policymakers said.

The various fiscal and monetary policy "support packages" will alleviate some of the financial burdens of households and businesses. Favourable external demand conditions will continue to provide a lift to growth. Going forward, the gradual relaxation of containment measures, alongside the rapid progress of the domestic vaccination programme and continued strength in external demand will provide support for the growth recovery into 2022.